New Trouble On the Property Front: Will Stuyvesant Town’s Owners File Bankruptcy to Avoid Liability?
The Battle for Stuyvesant Town
The high profile case of Stuyvesant Town’s reversed rent control is at the forefront of the rent-controlled property struggle of many metropolitan areas. In 2006, Mayor Bloomberg helped fund the purchase of Stuyvesant Town for $5.4 billion dollars by Metropolitan Life, even providing them tax breaks. These new owners set forth trying to turn many of the the11,277 apartments of Stuy, a rent-controlled property, into a luxury apartment complex. Residents suddenly paid $4,000 market rent rate a month when they had previously paid thousands less.
Residents countered that since Met Life had enjoyed a tax reduction and other public benefits, the attempt to raise rent remains illegal. Their forthcoming class action lawsuit seeks to reinstate the rent stabilization and give damages amounting $300 million and allocate the rent overcharges.
The Tishman Speyer realtors aren’t the only ones to lose big—the property has already depreciated to 1.99 billion dollars, deflated from its original $5.4 billion purchase. Several investors funneled money into that purchase, including $500 million from CalPERS that’s already sunk to $100 million, as well as the real estate investment firm Capmark. These real estate investors are hearing alarming rumors that the underlying realty company Tishman Speyer may default on a $3 billion dollar loan.
In an economy where a bloated “luxury” real estate market led to collapse, speculators worry that this default might force Tishman Speyer to file bankruptcy to avoid not just the owed damages but the depreciated value to investors. Investment companies have a wide span of influence that can affect thousands of innocent renters and, eventually, homeowners who need to file bankruptcy to avoid foreclosure. If you’ve been affected by the bloat of real estate investment with a huge rent spike, you may worry about eviction. The automatic stay of bankruptcy can prevent eviction. If you’d like to learn more about how bankruptcy can keep a roof over your head, please contact the bankruptcy consultants at Legal Helpers. We provide a free initial bankruptcy consultation—call us today toll-free at 1-800-260-1402.
Subscribe to this comment's feed
